Ariel Katz
Ariel Katz
Grant Thornton Israel

The $1.9 trillion stimulus bill Biden will sign

Rescue U.S.A. photo: GT stock

The key items in the massive bill that now goes to President Joe Biden’s desk to sign.

The House passed President Joe Biden’s $1.9 trillion stimulus bill, the last step before it goes to his desk to be signed into law.

The legislation includes a wave of new spending, an extension of jobless benefits, another round of direct household payments, money for state and local governments and an expansion of vaccinations and virus-testing programs, including a national vaccine distribution program for all residents regardless of immigration status. It also includes a massive, one-year expansion to the child tax credit program aimed at curbing child poverty.

Here are the key items:

Stimulus Checks

The legislation would send a third round of stimulus payments — this time at $1,400 per eligible individual. Singles earning up to $75,000 will get the full amount, with the payments phasing out completely by $80,000 in income. Couples making up to $150,000 will get $2,800 — $1,400 per person — with the payments declining at higher incomes and zeroing out altogether at $160,000. Children and adult dependents in those households are also eligible for $1,400 payments.

The plan would also allow residents who are married to undocumented residents to receive stimulus payments; they were barred in prior rounds. The IRS is likely to begin sending the first wave of payments out via direct deposit before the end of the month.

Vaccinations, Testing

The legislation includes $160 billion for vaccine and testing programs to help stop the virus’s spread and ultimately end the pandemic. The plan includes money to create a national vaccine distribution program that would offer free shots to all U.S. residents regardless of immigration status.

The legislation includes funding to create community vaccination centers and deploy mobile units in hard-to-reach areas. Money is also directed toward testing efforts, including purchasing rapid-result tests, expanding lab capacity and helping local jurisdictions implement testing regimens.

State Aid

Senate Democrats included more than $360 billion in aid for state, local and territorial governments. Democrats for months have pushed for more money to help state and local governments that have faced higher costs and lower tax revenue during the pandemic. States and cities warn they’ll be forced to make deep cuts to public health, safety and education programs without more funding, because they can’t borrow money in the way the federal government can. Many Republicans chafed at more money for local governments, saying it amounts to a bailout for mismanaged budgets. The package also includes specific pots of money for critical infrastructure, including broadband internet, and money for rural hospitals.

Unemployment Insurance

The legislation would extend supplemental unemployment benefits that are scheduled start running out March 14. The bill extends the weekly federal benefit of $300 a week through Sept. 6. That was a last-minute compromise to appease centrist Democrat Senator Joe Manchin of West Virginia. Manchin who was concerned that previous versions of the bill, that called for higher payments or a longer extension, were too costly.

The package also extends benefits for self-employed individuals and gig workers, along with those who have exhausted their regular jobless benefits. It includes tax relief on the first $10,200 in unemployment payments for workers in households earning up to $150,000 a year. The change will prevent many people from receiving surprise IRS bills this spring. Individuals who have already submitted their tax returns this year paying taxes on their jobless benefits can file an amended tax return to claim a refund for that money.

Health Coverage, Paid Leave

A late addition to the legislation by the Senate would cover 100% of the costs of continuing health insurance through September for laid-off workers eligible for so-called COBRA coverage in employer health plans.

The bill provides tax credits for employers with fewer than 500 workers to reimburse them for paid leave costs of up to $1,400 per week per worker. The bill does not mandate that employers offer paid leave.

Tax Credits, Childcare

The bill would expand tax credits for low- and middle- income families and make them refundable for 2021. It would also expand the child tax credit to $3,000 from $2,000 for each child aged 6 to 17. Children 5 and younger would be eligible for $3,600. The tax credits would be sent to households monthly starting in July, effectively creating a guaranteed monthly income for parents. Democrats are beginning to push to make the benefit permanent.

The bill also includes $25 billion for a stabilization fund to help open child-care centers and $15 billion in grants to support essential workers in meeting childcare costs.

Rental Help

The legislation would provide $45 billion to help low-income households that have lost jobs pay rent, mortgages and utility bills. The plan would also provide $5 billion to states and localities to offer emergency housing for families facing homelessness.

Business Taxes

Companies that work with “third-party” gig workers will be required to report more transactions to the IRS, likely resulting in more taxes paid by contractors. Under current law, companies don’t have to report transactions to the IRS unless a contractor is paid more than $20,000 and is a result of 200 or more transactions. The bill would lower that amount to $600, no matter the number of transactions.

The legislation also repeals the worldwide interest allocation provision, which allows companies to choose where to attribute their interest costs. The bill also extends a tax provision from the Republican 2017 tax law that restricts how businesses losses can be carried forward to offset future-year profits through 2026. The provision was initially implemented through 2025.

Small Businesses

The legislation includes $25 billion to help restaurants struggling from pandemic lockdowns and closures and $1.25 billion for venue operators. The bill also includes $15 billion for targeted Economic Injury Disaster Loans and an additional $7.25 billion for forgivable loans in the Paycheck Protection Program.

To learn more about how the new stimulus bill will directly impact you, please feel free to contact me directly at Grant Thornton Israel.  The contact information is ariel.katz@il.gt.com or 03-710-6644.

About the Author
Ariel Katz CPA is an expert in United States taxation and accounting at Grant Thornton Israel. Mr. Katz focuses on individual, corporate, and non-profit companies, and advises many companies in the area of tax structuring and planning. Mr. Katz is highly involved in academic teaching and professional training. He conducts various activities, including: Senior lecturer in the accounting department in the field of corporate taxation and partnership taxation at the College of Management Academic College. His hobbies include learning Torah, chess, bicycle riding, and running.
Related Topics
Related Posts
Comments